UNCTAD Secretary-General Calls for Increased FDI to Meet SDGs
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The UNCTAD Secretary-General said a surge in FDI is needed to help countries meet the SDGs.

He said 130 countries have used UNCTAD's roadmap for reform to devise a new generation of investment treaties more aligned with sustainable development.

11 October 2017: The UN Conference on Trade and Development (UNCTAD) Secretary-General, Mukhisa Kituyi, noted that investor uneasiness caused in part by steps that countries took to reform international investment agreements (IIAs) resulted in a 14% decrease in foreign direct investment (FDI) in 2016. He cautioned that, without a massive FDI surge, developing countries will fall short of many of Sustainable Development Goal (SDG) targets.

Kituyi explained the trend during the 2017 Multi-year Expert Meeting on Investment, Innovation and Entrepreneurship for Productive Capacity-building and Sustainable Development, which convened from 9-11 October 2017 in Geneva, Switzerland.

The UNCTAD Secretary-General said developing countries need an additional US$2.5 trillion in FDI each year to achieve the SDGs.

The UNCTAD Secretary-General noted that developing countries already face a US$1 trillion investment deficit in basic infrastructure like roads, power stations and hospitals. To achieve the SDGs, these countries need an estimated additional US$2.5 trillion in FDI each year.

Kituyi explained that investor uncertainty is caused partially by steps that countries have taken to reform IIAs to try to achieve a better balance between protecting investors and safeguarding a State’s right to regulate. He noted that around 2,500 investment treaties signed before 2010, accounting for about 95% of all IIAs in force, “are not only outdated but unsustainable.” He said 130 countries have used UNCTAD’s roadmap for reform to devise a new generation of investment treaties more aligned with sustainable development.

The UNCTAD Secretary-General observed that governments have “numerous” policy options to modernize their stock of first generation IIAs, adding that the 2017 World Investment Report analyzes 10 of these options, including the termination of existing treaties. According to an UNCTAD Survey, 80 countries and regional groupings reviewed or are reviewing their treaty networks. Kituyi explained that some countries made unilateral decisions, declaring sunset closures to existing treaties, while others came up with newly concluded IIAs, which reflect sustainability initiatives.

Welcoming the efforts undertaken to modernize IIAs, Kituyi cautioned that a global investment regime cannot be based on solo actions by individual countries alone. Within this context, he emphasized that UNCTAD aims to build a rules-based investment regime that has broad international support, mobilizes investment and channels it for the SDGs. [UNCTAD Press Release]

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